In what appears to be one of the largest class action settlement in the history of ERISA litigation in New Jersey, a federal judge approved $33 million settlement, including $11 million in attorneys’ fees, between Horizon Healthcare Services, Inc. (“Horizon”) and plaintiff chiropractors.
The underlying lawsuit stemmed from allegations that Horizon made “across-the-board” denials of certain types of claims that were submitted by chiropractic physicians. Plaintiff’s complaint followed an October 7, 2009 cease and desist order by the New Jersey Department of Banking and Insurance. In a subsequent class action complaint filed in New Jersey federal court against Horizon, plaintiff asserted that the Horizon Blue Cross Blue Shield of New Jersey improperly and systematically bundled various Current Procedural Terminology (“CPT”) codes that contracted and non-contracted chiropractic physicians billed to Horizon. Plaintiff claimed that Horizon summarily denied reimbursement for non-CMT (chiropratic maniupulative therapy) services and unilaterally determined that the non-CMT services were bundled with Horizon’s payment for CMT services. Thus, Plaintiff asserted that Horizon failed to determine whether the non-CMT billed services were separate and distinct from the CMT services. On behalf of the all chiropractic physicians that submitted claims under ERISA plans that Horizon administers, Plaintiff’s complaint sought benefits due to the chiropractor physicians from plan member’s assignment under 29 U.S.C. § 1132(a)(1)(B), and also alleged that Horizon’s conduct constituted a failure to provide full and fair review pursuant to ERISA, 29 U.S.C. § 1133. The remaining counts for non-ERISA plans alleged violation of New Jersey law, breach of contract and breach of covenant of good faith and fair dealings. On or about June 1, 2015, the federal court certified two classes, including an ERISA class.
On October 13, 2016, Judge William Martini approved the settlement agreement and granted the Plaintiff’s Motion for Award of Attorneys’ Fees. The court agreed to require Horizon to deposit $33 million for the settlement fund and awarded $11 million of the settlement fund as attorneys’ fees to class counsel. Among other things, the Court noted that Plaintiff’s counsel conducted significant research and discovery, including review of 200,000 pages of documents, number of depositions and analyzed claims data for more than 19 million records.
This case highlights the significant exposure under ERISA that may result from improper billings and reimbursements for health plan administrators, insurers and providers.